Sunday, October 07, 2012

Is DLF VS Vadra VS Bank Another Version OF SATYAM COMPUTERS?

Who to believe: Vadra's bank or balance sheet?
BS Reporter / New Delhi Oct 12, 2012, 00:02 IST

The curious dealings of Robert Vadra have become even more curious, with a bank mentioned in the balance sheet of one of his companies denying it ever undertook a transaction clearly stated in the firm’s auditor’s report.

Mangalore-headquartered Corporation Bank has said in its reply to a Business Standard report (Vadra: ‘A little help from my friends’, October 10), which pointed out that the bank’s Friends Colony branch had given an overdraft of Rs 7.94 crore to Vadra’s firm Sky Light Hospitality, that such a transaction did not take place. “We have gone though (sic) our records and do not find that any such facility was granted to M/s Sky Light Hospitality as has been reported,” the bank said in a fax this evening, quoting the article mentioned, but did not deny it had business dealings with Vadra or any of his firms.

The overdraft of Rs 7.94 crore by the Friend’s Colony Branch of Corporation Bank, however, is clearly present on page 5 of the auditor’s report for Sky Light Hospitality for 2007-2008, under the head ‘Schedules Forming Part of Account for the Year Ended 31st March 2008’. This document is publicly available on the ministry of corporate affairs (MCA) website.

The document is signed by both Robert Vadra and his mother, Maureen Vadra, both directors in Sky Light Hospitality, as well as chartered accountant, S Ramachandra Bhat, of SRC Bhat and Associates on September 5, 2008.

With Corporation Bank, whose name and branch is plainly stated in the balance sheet, now denying it extended any such facility to Vadra, the veracity of the information with the MCA itself is unclear. The implications are far-reaching. If the transaction was never made, as asserted by Corporation Bank, then it is not beyond reasonable doubt the mistake lies with the company in question, Sky Light Hospitality, or its auditor, SRC Bhat and Associates, or both.

The question also remains open, as a result of this, that if Corporation Bank did not provide Vadra with Rs 7.94 crore, then where else could it have come from? The amount is crucial because the same year Sky Light Hospitality paid the first instalment of Rs 7.94 crore to buy land in Haryana’s Manesar, thereby kicking off Vadra’s foray into the real estate business.

Corporation Bank probes into overdraft to Vadra's firm
The branch had given an overdraft of Rs 7.94 crore to Sky Light, which at that time had a paid-up capital of Rs 1 lakh only
Abhijit Lele & Somasroy Chakraborty / Mumbai/Kolkata Oct 10, 2012, 21:26 IST

Almost five years after it offered a generous overdraft facility to Robert Vadra’s Sky Light Hospitality, Corporation Bank has initiated an internal probe to examine if the transaction violated any regulatory norms.

The bank’s senior management has asked its Delhi regional office (the overdraft was given by Corporation Bank’s Friend Colony branch in New Delhi ) to send details on the transaction that dates back to 2007-08, sources familiar with the development told Business Standard today.

Public sector bank probing overdraft that helped Vadra buy land

Finance Minister P. Chidambaram may have described the controversial business dealings of Sonia Gandhi’s son-in-law as transactions involving “private individuals” but the disclosure that the public sector Corporation Bank had extended an overdraft of Rs 7.94 crore in 2007-2008 to Robert Vadra’s Sky Light Hospitality when his company had total resources of only one lakh rupees has left officials at the Mangalore-based lender scrambling to understand the circumstances in which the transaction took place and whether it conformed to normal lending guidelines.
Asked what amount Corporation Bank would normally extend as overdraft to a borrower with a company whose issued capital was Rs.1 lakh, Ajai Kumar, Chairman and Managing Director, Corporation Bank, told The Hindu, “It is not a question I can answer until I get the full facts. You should understand. You have to take the full picture.” He cited client confidentiality for not sharing the information, even if he were to get it, on Mr. Vadra's business with the bank. However, he added that he could get the full facts from the branch in Delhi “may be by tomorrow” [Thursday].
Details of the overdraft were reported in Business Standard on Wednesday, which noted that the money—which was used towards the first instalment on a Rs 15.38 crore parcel of land in Manesar, Haryana—was returned to the bank by Mr. Vadra a year later. The land itself was sold by Mr. Vadra to DLF for Rs 58 crore.
It is not clear from Sky Light’s balance sheets what collateral, if any, was put up for the overdraft.
B.K. Divakara, General Manager (Credit), Corporation Bank, told The Hindu: “As of date, we have no liability from that person. It [the overdraft given by the Bank] was two to three years ago. No one is aware who was there that time (sic). We have to take up the details.”
About norms followed by the Bank for extending overdrafts, he said: “There is no such fixed upper limit. It depends on the merits of each case. It cannot be generalised.”
A highly-placed source within the bank told The Hindu that Corporation Bank extends overdrafts to customers based on their “business projects, net worth and past record.” Commenting on the size of the overdraft, one official said that in this particular case, “on the face of it, he [Vadra] can’t be given [an overdraft of that amount]. If [he] has, they [the Bank officials] have to see why he has been given [it].” “Unless he is very regular and well meaning, it is a risk,” he added.
A general manager of another public sector bank said that he could not give a “yes” or “no” reply to whether this specific overdraft could be justified. However, he noted that given the capital of the company, the overdraft amount “definitely” appeared disproportionate.
In August 2011, the Central Vigilance Commission (CVC) had issued a memo to the Department of Financial Services of Corporation Bank seeking an explanation from its former CMD, Ramnath Pradeep, on “noticed lapses” in giving unsecured loans. The CVC, in the memo, had directed the DFS to take “immediate action” to stop the CMD from continuing “the abuse of authority”.
Top executives of the Bank at that time took out a signature campaign to gather support for a memorandum appealing to former Finance Minister Pranab Mukherjee to “save” the bank.
The CMD when Mr. Vadra got his overdraft was not Mr. Pradeep but B. Sambamurthy, currently director of the Institute for Development and Research in Banking Technology, Hyderabad. Mr. Sambamurthy told The Hindu he had no recollection of the overdraft.

Economic Times Editor has tried to do a great favour to DLF and Vodra by giving a confusing headline of this news. Message tried to be conveyed by headlines is at complete variance with  what have been given in details given below the said headlines.

Headline says that directors of DLF have given a clean chit to DLF by saying that there is no wrongdoing by DLF to Vodra. But in detailed news given just below headlines at the same place in the same ET, it reports that directors were not even aware of the transaction which took place between DLF and Vodra and it is directors who have also suggested an investigation into the deal in line with what has been demanded by Arvind Kejriwal and opposition parties like BJP, CPI, CPM, SP etc.

Robert Vadra deals: DLF denies any wrongdoing; independent directors say no evidence of favour

News published in Economic times on Monday 08.10.12

NEW DELHI: Independent directors of DLF have said the controversial transactions between Robert Vadraand India's largest realty firm were not discussed by the board and if allegations of easy loans and cheap deals are proved, they should be probed.

"The matter was not flagged off at any board meeting. We have not come across any such instance where favours have been done. It's not come to our notice. It is not possible to look at each and every sale transaction. But we try to ensure that all transactions are done at market prices," said KN Memani, an independent director at DLF, and former chairman of Ernst & Young India.

No comments: